The demand for fixing older airplane engines is increasing due to a shortage of new ones.

Aircraft engine shops worldwide are facing a backlog due to parts and labor shortages, delayed deliveries of new airplanes from Boeing and Airbus, an engine recall, and premature repairs.

This summer, record numbers of travelers boarded planes, causing airline executives to anxiously await engine repairs and overhauls.

The repair and overhaul of engines have surged from a $31 billion industry prior to the pandemic to $58 billion this year, as reported by Alton Aviation Consultancy. This growth has made engine manufacturers, such as GE, and the numerous smaller companies that service their engines, highly profitable. Additionally, Rolls-Royce also benefits from this increase in demand.

' solution is to do more of the work itself.

"American Airlines is our only customer, and we have full control over our destiny in that area, according to David Seymour, American's chief operating officer."

American Airlines is set to increase its engine overhauls by approximately 60% from 2023 to over 16 engines per month in 2023, up from five engines per month in 2022. This expansion has resulted in the addition of 200 jobs and more equipment, including cranes, at its maintenance facility at Tulsa International Airport, which is the largest such space in the world.

The work centers on CFM56 engines, produced by a joint venture between GE and France's Safran. These engines power American's older Boeing 737 workhorse jetliners and many Airbus A320s. The majority of American's mainline fleet, consisting of over 960 aircraft, are made up of narrow-body airplanes.

"I can have these engines overhauled and through the shop in less than 60 days, compared to outside shops that take 120 to 150 days, sometimes even over 200 days," COO Seymour stated.

Bottlenecks abound

The difficulties in engine repairs are mainly due to the industry's challenging transition from the pandemic, which resulted in the dismissal of thousands of skilled workers. Airlines that delayed maintenance during the travel downturn subsequently rushed to fix their airplanes, but encountered worker and experience shortages as well as shortages of critical items such as engine components and aircraft seats.

New, more fuel-efficient airplanes are being delayed in delivery by Airbus and Boeing, causing carriers, including American, to keep older jetliners in service for longer than planned.

This summer, Airbus reduced its aircraft delivery forecast and announced cost cuts due to supply chain problems and delayed landing gear and engine deliveries.

Thomas Toepfer, Airbus CFO, stated on a July 30 earnings call that the surprise factor for 2024 could also be referred to as such.

Boeing aircraft have been delayed due to supply chain issues and a safety crisis resulting from a door panel blowing out from a 737 Max plane midair at the beginning of the year.

The need for routine maintenance and revamps of older airplanes, which require overhauls about every 7,000 flights, adds to demand when they're due to come into the shop. These weekslong overhauls are exhaustive and can cost $5 million apiece for narrow-body airplanes, with wide-body airplanes costing double that, according to Kevin Michaels, a managing director at AeroDynamic Advisory.

In Tulsa's American shop, employees remove hundreds of parts, replacing life-limited components and inspecting others, which involves spraying them with a fluorescent penetrant to detect defects under a black light.

The cost of a single engine compressor blade can be as high as $30,000.

Newer engines, which run hotter and burn less fuel than older types, are arriving at engine shops earlier than anticipated, causing frustration among airline CEOs.

"Using key assets is crucial for generating revenue in any business, as stated by AirBaltic CEO Martin Gauss," said Martin Gauss.

To compensate for its grounded aircraft, the Riga, Latvia-based airline, which is an Airbus A220 customer, had to lease planes in recent years.

"Regrettably, passengers are unhappy when they cannot fly on new aircraft," he stated. "This problem will eventually be resolved. We believed it would be resolved by now. I would give it another two years, and then we will have overcome it."

Engine shops are facing another issue: a Pratt & Whitney engine recall of some of its narrow-body engines. Due to ongoing problems, some low-cost airlines, including Frontier and Spirit, are postponing new jet deliveries in an attempt to save money.

AeroDynamic Advisory's Michaels stated that the brew is wicked and has had a significant impact on the engine supply chain.

Windfall for engine makers

Engine suppliers have profited from the high demand for engine overhauls, earning billions from maintaining engines they sell with new airplanes.

In the first half of 2024, GE Aerospace generated $11.7 billion from engine maintenance, repairs, and overhaul, which accounted for 65% of its total revenue.

""The engine business generates revenue through the sale of replacement blades, which can result in repeat business for years," said Michaels, explaining how buying shavers in a drug store can lead to ongoing profits."

GE Aerospace, having separated from its parent company in April, announced in July that it plans to spend $1 billion on modernizing its engine facilities globally over the next five years.

Got spares?

With the increase in demand for replacement engines, many airlines face the challenge of limited alternatives to costly engine overhauls, particularly if they have a specific type of aircraft or model that only has one supplier.

The cost of engines that are compatible with both older and newer aircraft has increased dramatically. For instance, a CFM56 engine used on the Boeing 737-800 was sold for $96,000 per month in 2018, up from $78,000 in 2017, according to aviation data firm IBA.

The lease rates for Pratt & Whitney and CFM engines that power the newer Airbus A320neo airplanes have increased from $80,000 and $85,000, respectively, to $127,000 per month, according to IBA.

Due to high demand, firms such as AerCap and Avolon have been acquiring excess engines.

It is still difficult to get into an engine shop, however.

The airline, similar to American, overhauls, repairs, and maintains its own engines. However, CEO Ed Bastian states that the shop is fully occupied, and it also performs work for other airlines.

""Getting into a Taylor Swift concert is easier than being on an existing contract," he stated in a July interview."